Following news of the lockout at Apollo’s Kerala, India-based facility, shares in the company fell by around six per cent, but management reassurances that the company would make up the production deficit elsewhere and 85 per cent of the Perambra workforce wanted to return to work have pushed share prices to levels experienced prior to the lockout, according to financial news sources.
The lockout at Apollo Tyres’ Perambra factory in India’s Kerala state is now in its second week, and the company’s chief of India Operations, Satish Sharma, has released an official statement broaching the issue:
Shares in Apollo Tyres Ltd have fallen around five per cent since the announcement of a lockout at its Perambra factory. This plant accounts for nearly a quarter of Apollo’s global tyre production and has a capacity of 850 tonnes per day, yet even before the lockout it was not reaching anything near this amount – and it is thus not surprising that investors are showing signs of nervousness.
In June 11 filing to the Bombay Stock Exchange, Apollo Tyres has reported the initiation of a lockout at its Perambra factory in Kerala. “With reference to the earlier announcement dated April 29, 2010, Apollo Tyres Ltd has now informed BSE that the management has declared Lock-out at company's manufacturing facility at Perambra,” stated the filing, quoting “labour unrest relating to long term settlement negotiations” as the reason for its action.
Apollo Tyres has confirmed that its OE arrangements with Volkswagen may be extended into the European market. Addressing journalists in Cologne, Germany, Neeraj Kanwar stated “only recently, five years ago, we went into the OE segment in India. Today in India we supply to all the top automotive industry. Recently we’ve gone into VW, supplying them tyres for the cars that they’re launching in India, and we are in discussions with them to supply tyres to them in Europe.”
At the same time Apollo Tyres introduced its moniker to the European markets at the Essen Reifen Show, the Indian company was also introducing the Vredestein name to its domestic customer base ahead of a launch taking place in the next 12 months. "We are working on launching the Vredestein brand in India. We will look at introducing it within a year… We have been studying the demands of the Indian market in the premium segment. The only thing is that in India, tyres are of low-level and heavier ones, and more in the mass segment," the Press Trust of India quoted Apollo Vredestein chief executive officer Rob Oudshoorn as saying.
Apollo Tyres has launched what it calls Habitat Apollo, a conservation and recycling initiative designed to “conserve and recycle non-renewable resources in the most effective way.”
The first formal drive under the environment initiative is on paper recycling. Employees are encouraged to use both sides of a piece of paper, print only when necessary, and dispose in a special bin. The paper collected from these bins is then taken for recycling and the recycling company gives Apollo Tyres office stationary in return.
The next initiative is to reduce the consumption of non-biodegradable materials across functions. In keeping with this spirit, Apollo Tyres has decided to completely do away with the conventional poly-wrapping of tyres.
Indian business journal Mint asks the question – will the nation’s tyre makers be able to retain their margins during the 2011 fiscal year? The publication comments that, after falling in the March quarter, profit margins are looking set for another battering at the hands of rising rubber prices (up 70 per cent in one year and 150 per cent within the last 18 months, notes Mint) in the following quarter.
Titan Tire Corporation, a subsidiary of Titan International, Inc. has announced that it will implement a price increase on Titan branded farm and construction tyres and Titan manufactured Goodyear branded farm tyres effective 1 June 2010. The increase of up to approximately 6 per cent is designed to offset rising raw material, energy and transportation costs, according the company, which points out that “certain tyre prices may rise in excess of 6 per cent due to realignment and positioning of the product.”
Apollo Tyres has confirmed it will increase tyre prices again by 4 per cent in June after already hiking prices by 3.5 per cent on 1 May, reports Tire Review. The company cited increases in natural rubber and crude oil costs as the reason for the successive price hikes. Citing similar input cost pressures, Apollo had increased prices 2 per cent to 4 per cent in April and 3-5 per cent in January.
Apollo Vredestein has announced it will use the Reifen Essen show as a platform to introduce the newest addition to its winter tyre line-up, the Vredestein Wintrac Nextreme. The design of this successor to the Wintrac Xtreme comes from Italy’s Giugiaro, and the tyre is intended to compete in the ultra high performance segment.
Indian tyre makers are putting up prices in response to the continued rise in the cost of natural rubber. Apollo Tyres is said to be increasing prices by between two and four per cent, although one online source states the Apollo prices will rise by up to seven per cent as early as May. During an interview, company vice chairman and managing director Neeraj Kanwar said further increases cannot be ruled out should the cost of rubber continue its upward course.
On March 19 Apollo Tyres South Africa announced plans to invest R300 million (£27 million) in new equipment and technology for the company’s facilities in Durban and Ladysmith. The upgrades will be implemented over a three-year period.
A cooperation between Vredestein and car manufacturer Arden has been signed by Apollo Vredestein CEO Rob Oudshoorn and Arden’s Jochen Arden. Through the agreement, Vredestein reports it has now found a partner in Arden for modified vehicles from the premium Jaguar, Bentley and Range Rover and Mini brands.
Apollo Tyres has opened its 150th sales and marketing office in Tirunelveli, in the southern Indian state of Tamil Nadu. It is also Apollo Tyres’ 10th sales and marketing office in Tamil Nadu. The 149th office was in Etawah, Uttar Pradesh and the 148th in Begusarai, Bihar, opened in February and January this year. Since March 2009 Apollo Tyres has added 15 sales and distribution points to its network in India, something the company points to as being in keeping with the company’s “mantra” of being close to the customer.
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